U.S. adds 130,000 jobs in August amid trade war

WASHINGTON (AP) — U.S. employers added a modest 130,000 jobs in August, a sign that global economic weakness and President Donald Trump’s trade war with China may have begun to slow hiring.

The job gain was boosted by the temporary hiring of 25,000 government workers for the 2020 Census. Excluding all government hiring, businesses added just 96,000 jobs, the fewest since May.

The Labor Department reported Friday that the unemployment rate remained 3.7%, near the lowest level in five decades. The jobless rate was flat for a positive reason, though: Americans surged into the workforce, lifting the proportion of adults who are either working or looking for work to its highest level since February.

Job growth has averaged 150,000 a month for the past six months, a decent rate, though down from 223,000 for all of last year.

The rate of job creation is significant because at a time when the economy has been slowing, additional steady hiring — and higher pay — can continue to fuel consumer spending, the primary driver of growth. Unlike consumers, many businesses have slowed their spending and delayed expansion and investment given their uncertainty about the duration and impact of the trade war. In addition, retaliatory tariffs from China have cut into U.S. exports.

For now, Americans are still spending and keeping the economy moving. Consumer spending rose in the April-June quarter by the most in five years. It had also increased at a healthy clip in July.

Consumers generally appear to feel positive about the economy despite some cautionary signs. Their confidence, as measured by the Conference Board, is still strong. But an index of sentiment compiled by the University of Michigan fell in August by the most in nearly seven years. In that survey, Americans expressed rising concern about the consequences of tariffs.

U.S. and Chinese officials plan to meet in early October in negotiations that are intended to resolve their dispute. The announcement Thursday of next month’s resumption of talks helped ignite a rally on Wall Street.

The trade war has hammered manufacturers, which have suffered as exports have fallen and many companies have postponed investments. The trend hasn’t yet translated into lost jobs, although factory hiring has slowed.

As the tariffs increasingly take effect, trucking companies could absorb a hit if they have fewer factory and farm goods to ship. And retailers might cut workers as tariffs start to affect such consumer goods as clothes, toys, and electronics. If setbacks in those industries become severe enough, they could eventually raise the unemployment rate.

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FILE PHOTO: Job seekers line up at TechFair in Los Angeles, California, U.S. March 8, 2018. Photo by Monica Almeida/Reuters